Confidential

Facts

Plaintiffs, the Gorman family, moved into a custom built home in a local beach community, on Oct. 14, 1999. The plaintiffs contended that shortly after moving into the home, they began to suffer from chronic respiratory and sinus infections and fatigue. The plaintiffs further contended that the Gorman's son Kellen, who was born into this home, suffered the most critical injuries, including severe developmental delays as a result of an organic brain injury caused by mold exposure.

PLAINTIFFS' CONTENTIONS:
The plaintiffs contended that there were numerous construction defects which caused water intrusion and led to mold growth in the home. Additionally, the plaintiffs contended that the lumber which was used to construct the home was contaminated with toxic molds.

The mold investigations done by the plaintiffs' experts revealed that the downstairs interior wall space was contaminated with various molds.

Additionally, the plaintiffs' experts opined that the framing studs were also contaminated with various molds. Sophisticated testing revealed the actual presence of mycotoxins, toxins produced by molds, on indoor surfaces as well as within the airspace of the home.

The plaintiffs asserted that the contaminated residence led to multiple health complaints ranging from the plaintiffs' chronic respiratory and sinus problems to a catastrophic organic brain injury in Kellen Gorman, their five-year-old son. The plaintiffs presented evidence that the only fix to the Gorman residence was a complete tear down and rebuild.

The plaintiffs presented experts who opined that the mold and its toxins caused the medical complaints of the Gorman family. The plaintiffs' experts opined that an immunological response to molds and their toxins, as well as how a direct toxic effect, can occur, causing the type of severe brain damage.

DEFENDANT'S CONTENTIONS:
The defendant contended that the Gormans suffered from normal sinus and respiratory problems, some of which were pre-existing to their residence at the home. The defendant also contended that the home was infested with mold as a result of poor design and construction practices of others, as well as poor maintenance by the homeowners. However, the defendant contended that there was no evidence of any nexus between any of the water-intrusion based mold conditions and the physical complaints of the plaintiffs. Moreover, it was contended that there was no evidence that any lumber delivered by the lumber supplier was laden with any mold at the home were found three or more years after the plaintiffs vacated the home, and after the leaky home had sat unremediated the entire time. The defendant also contended that Kellen Gorman, born premature, is autistic and that there is no evidence that the autism was caused by the mold.

Settlement Discussions

Settlement: $22,600,000 settlement, mid-trial, to the plaintiffs for neurological injuries as a result of toxic mold exposure.

Damages

All members of the Gorman family claimed varying degrees of respiratory problems, sinus infections, and fatigue. Gary Gorman suffered a chronic sinus infection for several years and suffered neurocognitive damage as well. Kellen Gorman had repeated respiratory and ear infections for a several year period which resulted in intubation. He also claims to have suffered a catastrophic brain injury which presented on MRI as diffuse lesions throughout the white matter of his brain. Due to this injury, it is claimed that Kellen Gorman suffers from permanent developmental delays in all areas, including a complete lack of speech.

Result

Total Settlement: $22,600,000.

Other Information

During a series of earlier mediations, ordered by the Court, the plaintiffs settled with peripheral defendants involved solely in property damage claims for a total of approximately $150,000. On March 11, 2004, Judge Victoria G. Chaney, after a lengthy hearing, ruled that the plaintiffs' experts had a sufficient basis to testify to Kellen Gorman's brain injury resulting from toxic mold exposure. Over the next several months, the plaintiffs propounded policy limit demands to the remaining defendants. In a series of mandatory settlement conferences presided over by the Hon. Victoria G. Chaney, and mediations presided over by the Hon. Burton Katz (retired), the plaintiffs generated $8,100,000 in settlements. On the eve of trial, the plaintiffs engaged in settlement discussions with the two remaining defendants. One defendant paid $1,500,000 on a policy which had a $1 million policy limit. The remaining Doe defendant (lumber company) chose to proceed to trial. This defendant had previously offered the plaintiffs a settlement in the amount of $501.00, which they increased to $100,000 prior to trial. On the first day of trial, the remaining defendant offered $1,000,000. This offer was rejected. Prior to trial, the plaintiffs gave this defendant the opportunity to settle for $400,000. This demand was increased to $1,000,000 and remained open until the first day of trial. On the first day of trial, the plaintiffs increased their demand to $1,800,000. This demand was rejected by the defendant. Later, during trial, the Court ordered that the Doe defendant would not be permitted to present most of its intended experts. A motion for mistrial followed. Thus, after six weeks of trial, and one day prior to the plaintiffs' resting their case, the parties were ordered to attend a mandatory settlement conference in front of the Hon. Carl West. The case settled at this mandatory settlement conference for $13,000,000.